WASHINGTON, DC -- U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee, and Rep. Rob Andrews (D-NJ), issued the following statement on final regulations issued by the U.S. Department of Labor today that may undermine retirement savings plans of millions of Americans. It will allow financial services firms to offer potentially conflicted investment advice on workers’ retirement accounts.
"We are disappointed that the Bush administration moved forward to enact a new regulation that will make it harder for workers to receive fair and honest advice when making key financial decisions about their futures.
“With just a few hours to go, the Bush administration is still scrambling to give Wall Street a last-minute payback. Today’s regulation will allow financial services companies to reap windfall profits at the expense of workers and tips the scales towards special interests by opening the door to conflicts of interest among the very consultants purporting to offer unbiased investment advice. At a time when Americans are rightly concerned over their financial future, it’s unfortunate that the Labor Department is using its time to give special interests paybacks rather than working to actually help workers.
“As we transition to a new administration, we will use every tool at our disposal to block implementation of this harmful regulation.”
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WASHINGTON, DC -- President Bush signed bipartisan legislation today to temporarily suspend a tax penalty for seniors who do not take a minimum withdrawal from their depleted retirement accounts in 2009, such as 401(k)s.
The Worker, Retiree and Employer Recovery Act (H.R. 7327), introduced by U.S. Reps. George Miller (D-CA), Charles B. Rangel (D-NY), Howard P. “Buck” McKeon (R-CA), and Jim McCrery (R-LA), suspends an Internal Revenue Service requirement for one year that account holders of 401(k)-style plans must withdraw a minimum amount of money every year after they reach 70 ½ years old. This suspension would be available to everyone regardless of their retirement account balances.
“Americans have seen trillions of dollars evaporate from their
retirement accounts over the last few months as a result of our
economic crisis,” said Rep. George Miller (D-CA), the chairman of the
House Education and Labor Committee. “Congress worked swiftly, and in a
bipartisan way, in order to provide important relief to seniors who may
face a steep tax if they do not make a withdrawal from their depleted
retirement accounts.”
Miller and Rep. Rob Andrews (D-NJ) called
on U.S. Treasury Secretary Henry Paulson in October to suspend a tax
penalty for seniors who do not take a minimum withdrawal from their
depleted retirement accounts, such as 401(k)s. Last week, the agency
declined to act to provide relief for the 2008 tax year. To read the
letter to Sec. Paulson,
click here.
“Countless
jobs and retirement benefits will remain intact thanks to the enactment
of the Worker, Retiree, and Employer Recovery Act today,” said Andrews,
the chairman of the Health, Employment, Labor and Pensions
Subcommittee. “As a longtime proponent of suspending the required
minimum distribution for retirees aged 70 ½ and over with 401(k) and
other defined contribution accounts and as the author of the transition
rule which provides single employers an affordable transition towards
fully funding their pension plans, I would like to thank Chairman
Miller for his tremendous leadership in enacting HR 7327.”
Current
regulations require account holders of 401(k)-type account to withdraw
a minimum amount of money every year after they reach 70 ½ years old.
If seniors do not take out a minimum amount based on an Internal
Revenue Service formula, they are subject to a 50 percent penalty. For
instance, if an individual fails to withdraw $4,000, they would be
assessed a $2,000 tax the next year.
H.R. 7327 also eases
funding requirements for companies and other pension plans forced to
make additional contributions as a result of the economic downturn and
makes technical corrections to the Pension Protection Act of 2006.
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WASHINGTON, DC -- The U.S. House of Representatives approved bipartisan legislation today that would temporarily suspend a tax penalty for seniors who do not take a minimum withdrawal from their depleted retirement accounts, such as 401(k)s.
The Worker, Retiree and Employer Recovery Act (H.R. 7327), suspends for one year an Internal Revenue Service requirement that account holders of 401(k)-style plans must withdraw a minimum amount of money every year after they reach 70 ½ years old. This suspension would be available to everyone regardless of their retirement account balances.
“Americans have seen trillions of dollars evaporate from their retirement accounts over the last few months as a result of our economic crisis,” said U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee. “I’m glad that Congress worked swiftly, and in a bipartisan way, to provide important relief to seniors who may face a steep tax if they do not make a withdrawal from their depleted retirement accounts.”
“This relief will help workers and seniors safeguard their retirement savings during the economic crisis.” said Ways and Means Committee Chairman Charles B. Rangel (D-NY). “Every segment of our economy is experiencing financial pain and this bipartisan legislation will go a long way to help employers do the right thing for their workers even in these difficult economic times.”
“This year’s economic downturn has seriously impacted the U.S. job market and benefits for workers,” said Rep. Rob Andrews (D-NJ), the chairman of the Health, Employment, Labor and Pensions Subcommittee. “The House acted responsibly tonight to address this problem by passing the Worker, Retiree, and Employer Recovery Act. The bill will provide financial relief to large and small employers, as well as individuals with 401(k) accounts and alike, who have been adversely affected by this unprecedented market downturn.”
“In the face of daunting economic challenges and an unanticipated strain on our nation’s retirement system, Congress has taken a measured and appropriate step to ease the financial burden on workers, retirees, and employer-sponsored pension plans,” said U.S. Rep. Howard P. “Buck” McKeon (R-CA), the Education and Labor Committee’s senior Republican. “While we remain fully and unequivocally committed to the notion that businesses and unions must fully fund their pension obligations to their workers, the small step we’re taking today will provide much-needed relief to participants, plan sponsors, and beneficiaries in the short term, potentially staving off job cuts, benefit reductions, or financial burdens that would be far more harmful to workers and retirees in the long term.”
“The minimum distribution rules are especially burdensome in the face of sharp financial market declines; suspending these rules for 2009 will provide some much-needed relief to senior citizens, and I hope the Senate is able to act quickly on this measure,” said Rep. Jim McCrery (R-LA), the senior Republican on the Ways and Means Committee.
Current regulations require account holders of 401(k)-type account to withdraw a minimum amount of money every year after they reach 70 ½ years old. If seniors do not take out a minimum amount based on an Internal Revenue Service formula, they are subject to a 50 percent penalty. For instance, if an individual fails to withdraw $4,000, they would be assessed a $2,000 tax the next year.
H.R. 7327 also eases funding requirements for companies and other pension plans forced to make additional contributions as a result of the economic downturn and makes technical corrections to the Pension Protection Act of 2006.
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